NM 09/17 by NIADA

DEALER INSIGHT

S TAT E A F F I L I AT E

NPC MAGAZINE

THE OFFICIAL MAGAZINE OF NEW MEXICO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION / SEPTEMBER/OCTOBER 2017

DALLAS, TEXAS Permit No. 2079

PAID

PRSRT Standard U.S. Postage

V I S I T U S AT W W W. N M I A D A .C O M

2017 Annual NMIADA Convention/Expo & Continuing Education 2017 Annual NMIADA Convention/Expo & Continuing Education

We invite you to join us at this year’s NMIDA Convention!

The biggest industry event in New Mexico! We invite you to join us at this year’s NMIDA Convention!

Valuable information to help you grow your business.

•

The biggest industry event in New Mexico! • The most recent industry developments. •

• Compliance and procedural updates. Valuable information to help you grow your business. •

• industry Guest speakers with valuable information. The most recent developments. •

• procedural Over 40 industry vendors. Compliance and updates. •

Freevaluable breakfast and lunch Guest speakers• with information. •

Over 40 industry vendors. •

Free breakfast and lunch

Thursday, October 19, 2017 Isleta Resort & Casino Albuquerque New Mexico Thursday, October 19, 2017 Register now at www.NMIADA.com sleta Resort & Casino Albuquerque New Mexico

INSIDE INSIDE

06 ................................................... Letter from the Executive 08..................................................National Policy Conference 10........................Social Media Lessons from My PE Teacher 12..............................A Longer-Term View of Digital Retailing 14................................................. NIADA Government Report 16............................................................NMIADA Convention

WHAT’S NEW

NATIONAL POLICY CONFERENCE September 25-27

The NIADA National Policy Conference will be held September 25-27 in Washington, D.C. Meet face to face with federal lawmakers and regulators to make your voice heard! Learn more and register today at www.nationalpolicyconference.com.

ADVERTISERS INDEX

Alliance Inspection Management........................................ 13 AmTrust Financial .................................................................. 9 BMW Group Direct .................................................................7 Lobel Financial......................................................................IFC Manheim ...............................................................................11 New Mexico Mutual.......................................................... IBC NextGear Capital...................................................................12 Precision Auto Inspections ....................................................5 VAuto......................................................................Back Cover

OFFICE

New Mexico Independent Automobile Dealers Association 608 Chama NE • Albuquerque, NM 87108 Phone: 505.232.0809 • Fax: 505.232.0810 email: james@nmiada.com website: www.nmiada.com

MARKET WATCH

BY AUTO REMARKETING STAFF

U.S. BRANDS DOMINATE AUTOTRADER’S LATEST HOTTEST CARS LIST A Look at Recent Vehicle Searches

Autotrader’s Hottest Cars for Summer 2017 list named the 10 most-searched new, used and certified pre-owned cars on its site. The company looked at search volume from January to the end of May and found American consumers currently favor domestics. Autotrader editors found nine of its 10 mostsearched models are from a U.S. brand. More specifically, SUVs and pickups are trending in particular, taking eight out of 10 spots on the list. “Summer has a kind of patriotic, nostalgic feel and it’s a good time to shop for a car. Shoppers looking for American vehicles should check out our list of Hottest Cars for Summer 2017, since many are popular names

NIADA HEADQUARTERS NATIONAL INDEPENDENT AUTOMOBILE

DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. NM Dealer Insight is published bimonthly by the National Independent Automobile Dealers Association Services Corporation. 2521 Brown Blvd., Arlington, TX 76006-5203. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of NMIADA or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2017 by NIADA Services, Inc.

STATE MAGAZINE MGR./SALES

Troy Graff • troy@niada.com EDITORS

Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT

Christy Haynes • christy@niada.com PRINTING

Nieman Printing

BOARD MEMBERS CHAIRMAN

Pat Martinez All Star Auto Center Inc. 2307 E Main St Farmington, NM 87401 (505) 325-2300 pmatrinez@allstarcars.net

PRESIDENT

James Santistevan Zia Auto Wholesalers LLC 4913 Menaul Blvd NE Albuquerque, NM 87110 (505) 889-9653 ziawhsl@cs.com

VICE PRESIDENT

Felicia Richesin A Quality Auto Sales 921 Eubank Blvd Albuquerque, NM 87112 (505) 275-9999 aqualityautosales@gmail.com

TREASURER

Aaron Flores A-Star Motors LLC 5700 Menaul Blvd NE Albuquerque, NM 87110 (505) 503-6846 aaron@astarmotors.com

DEALER INSIGHT September/October 2017

made by domestic automakers,” Autotrader executive editor Brian Moody said. “Of course, the trend away from sedans is in full swing, with the majority of the mostsearched vehicles on Autotrader being trucks and SUVs like the Jeep Wrangler. Notable exceptions are performance coupes like the Chevy Corvette and Ford Mustang,” he said. Autotrader’s Hottest Cars for Summer 2017 List: 1. Ford F-150 2. Jeep Wrangler 3. Chevrolet Silverado 1500 4. Ford Mustang 5. Ford F-250 6. Chevrolet Corvette 7. Toyota Tacoma 8. Jeep Grand Cherokee 9. Chevrolet Silverado 2500 10. Chevrolet Tahoe Currently, Autotrader has over 3 million vehicle listings from 40,000 dealers and 250,000 private owners, according to the company. For additional information regarding the Hottest Cars for Summer 2017 list and Autotrader editorial commentary on the vehicles featured, go to www.autotrader. com/best-cars/10-hottest-cars-forsummer-2017-267489.

SECRETARY

Rob Martinez ABQ Auto Deals, LLC 169 Griegos NW Albuquerque, NM 87107 (505) 554-2428 rob@abqautodeals.com

DEALER BOARD MEMBERS

Thomas Hawkins AutoMax Farmington 5210 E Main St Farmington, NM 87402 (505) 327-0500 thomas@4automax.com Luis Soto Sun City Motors 8504 Central Ave SE Albuquerque, NM 87108 (505) 256-1200 suncitymotors@yahoo.com James Schrimer The Car Store, Inc. 1650 N. Valley Las Cruces, NM 88007 (505) 524-2283 thecarstorelc@gmail.com Dan Fiske Airport Auto Center 130 Airport Drive Farmington, NM 87401 (505) 325-3799 dfiske@goautoairport.com

ASSOCIATE BOARD MEMBERS

Gene Lujan Manheim Auto Auction-NM 3411 Broadway SE Albuquerque, NM 87105 (505) 400-6965 Eugene.Lujan@manheim.com Alan Clark Zurich Direct Markets PO Box 30846 Albuquerque, NM 87190 (505) 328-2387 Alan.clark@zurichna.com Alan Rumm ION GPS 5925 Phelan Blvd, Suite G Beaumont, TX 77706 (409) 866-6116 alan@ionmycar.com Ken Star Sunstar Capital Inc. PO Box 53279 Albuquerque, NM 87153 (505) 292-0611 ken@sunstarcap.com Mike Godin Godin Dealer Services PO Box 67440 Albuquerque, NM 87193 (505) 710-7295 mike@godindealerservices.com

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September/October 2017 DEALER INSIGHT

ASSOCIATION NEWS

LETTER FROM THE EXECUTIVE DIRECTOR MVD and Regulatory Update

To all our dealer members and partners: Wow, can you believe it is already Fall?! I can’t, and am in shock how fast this year has already flown by. The dog days of summer are over and my hope is each of you as independent dealers are diligently working to better your business practices. Part of what NMIADA is here for is to make sure all independent dealers in our state have the best information to run your business and stay up to date on what is going on in the world around you. MVD We now mark a year under the new MVD computer system, Tapestry. It has been a learning experience for users and the state,

but, overall, I believe getting our system into modern times far outweighs any growing pains it might have caused. NMIADA was an integral partner in the development of Tapestry. I want to thank director Will Duran, deputy director Alicia Ortiz, DLB bureau chief Noel Davis, and partner management bureau chief Angel Martinez for allowing NMIADA to have a voice in this major undertaking within the state. The state of New Mexico now has a cloud based, real time vehicle database able to change as laws, cars, and habits do. One of the great things about Tapestry is now licensed dealers have the ability to completely manage state licensure online 24/7. We can apply for a new license, renew an existing license, sign up for VIN inspection classes and renew dealer plate registrations, among other functions. NMIADA is a Tapestry partner with the MVD. Don’t forget we can meet all of your dealership title needs. We are fast, cost effective and reliable. In the end, every dollar you spend with us goes back into your industry

We would like to thank the following members who have renewed their memberships and welcome those who have newly joined the NMIADA family! A & M Auto Sales

Cars-EZ, LLC

Amigo Auto Sales

Ultra X Auto Sales, LLC

Carmax Auto Superstore

Tedson Trailer & Equipment

Casa De Autos

A&A Auto Sales& Detailing

Copart Auto Auction

Guitierrrez Used Cars

ReCarnation

Auto Lions

Zia Auto Wholsalers , LLC

Auto Appraisal Group

Dependable Auto Sales

Onyxx Auto Sales

to educate, represent, and advocate on your behalf! Try us out! Another area I want to update you on is the wonderful work DLB investigator Greg McCormick has done helping dealers battle curbstoning and all of the ancillary violations that come with the practice. I have seen more action taken against this crime the last year and a half than I ever have before. Greg has been relentless to weed out this practice and make the industry a better place to work. The best way we can help is to provide appropriate details on cars we see parked on curbs along our streets and highways within our state. If you provide me with clear pictures of the VIN, any registration tags, and the car location, I will follow up with Greg and let him do his investigation. This system works – use it! Email the vehicle information to james@nmiada. com. Regulatory/Legislative As we look back on the 2017 legislative session in Santa Fe, I am proud to say that due to our work months before the session with legislators, the governor, and the legislative finance committee, NMIADA was well represented in high level tax and revenue discussions and had an integral voice. Along with NMADA, we were very strategic in how we approached the New Mexico budget crisis and what we would and would not agree to. In the end, it was all made moot by the fact Governor Martinez vetoed all tax increases – as she always said she would – but we have taken a position and can now use that as we move forward in future sessions. As a small business owner myself, after years of never being involved in politics, I wish I had gotten involved long ago. I urge each of you to take the time to personally know those legislators that represent your business and your family. I also urge each of you to get involved on the national level. Most regulations we live and work under are federal. Our congressmen and women need to be educated on how these regulations – or proposed regulations – affect our businesses and our livelihood. A great place to get immersed into the national picture is to come to Washington D.C. with me September 25-27 for the NIADA National Policy Conference. You could leave Monday afternoon, be home Wednesday night, and in that short time get to meet with officials from the FTC, the NAAA Auctions Standards Committee, an industry friendly congressman, and all the New Mexico congressional delegation. I promise not one of you would regret giving those 48 hours to your business and your industry. For more information and to register, go to www.niadapolicyconference. com. I hope to see you in DC! Sincerely,

James Zanios

DEALER INSIGHT September/October 2017

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ASSOCIATION NEWS

BY SHAUN PETERSEN

THE REAL FALL CLASSIC NIADA’s Annual Trip to Washington – Now Called the National Policy Conference – Is All About Making Your Voice Heard

Fall is my favorite time of the year. Nothing beats a crisp morning stroll wearing a light jacket seeing the reds, yellows and oranges Mother Nature has introduced in the surrounding canopy. Fall also brings the best of the sports world. Whether it’s on high school Friday nights, college Saturdays or NFL Sundays, fans are packed into stadiums across the country cheering on their favorite football team. And don’t forget baseball’s Fall Classic – the World Series. But mostly fall is my favorite time of the year because that’s when NIADA members, staff and industry partners gather in our nation’s capital to advance the cause of the independent dealer before elected officials and bureaucrats. In 2013, the NIADA executive committee decided to strengthen the association’s presence in Washington D.C., by moving the National Leadership Conference to the capital city and re-establishing the Day on Capitol Hill after a lengthy absence. In 2016, we had our most successful conference yet, with more than 175 dealers and industry leaders attending and engaging with 100 Congressional offices – that is roughly one-fifth of the U.S. Congress reached in two days. During the conference, dealers have heard from a variety of regulators that affect their dealership. Speakers from the Department of Labor have discussed wage requirements, overtime regulations and properly classifying workers as employees or independent contractors. The Federal Trade Commission has reviewed its enforcement actions and explained its concerns about dealers’ advertising, compliance with the Credit Furnisher Rule and compliance with the Risk-Based Pricing Rule. The National Highway Traffic Safety Administration has spoken to our group about the epidemic of vehicle recalls and how that agency is involved in ensuring vehicle safety. Of course, we haven’t ignored the new kid on the block – the Consumer Financial Protection Bureau. We’ve had representatives from the CFPB present at the conference each year, covering a wide variety of topics including the bureau’s enforcement authority, its consumer complaint resolution process and complaint portal, and its efforts to regulate the collections marketplace – including

DEALER INSIGHT September/October 2017

creditors such as Buy Here-Pay Here dealers collecting their own debt. This year, we have rebranded the conference, which is coming up Sept. 25-27 at the Dupont Circle Hotel. It’s now called the National Policy Conference to emphasize that this event is our opportunity to shape public policy. We also want to make sure all NIADA members feel welcome to attend, not just those who hold a leadership position in the national or state association. This is an opportunity for every dealer to make his or her voice heard. And, make no mistake, your voice is being heard. Four years ago, our goal was simply to reintroduce the association to Congress and explain the difference between the National Independent Automobile Dealers Association and our counterparts at the National Automobile Dealers Association. Now we are at the point where not only can we talk to legislators about the important issues impacting our industry, we are actively solicited by them for our input. That would not happen without your active involvement in making your voice heard. So what can you expect as you join us for this year’s National Policy Conference? With a new presidential administration, the federal regulatory agencies are going through a number of changes as they transition from the Obama agenda to the Trump agenda. And one of the new top cops at the FTC will tell us about some of those changes, including their process for handling investigations. The CFPB continues to impact all dealers, whether it has direct jurisdiction over them or not. Its new arbitration rule impacts every consumer financial product – automotive retail installment contracts included. We anticipate the CFPB addressing its activities with us. The Small Business Administration is making an appearance at the NPC for the first time. Its representatives will tell us about their work and, more important, will listen to you explain your concerns with the regulatory framework you are under. And, though not yet confirmed, we have extended an invitation to special guests from the White House to join us and talk about the President’s plans for economic growth, such as tax reform, financial market reform and improved infrastructure. As important as hearing from those agencies is, let’s be honest, the main attraction of this conference is the opportunity to engage with your members of Congress. We expect to interact with more than 100 Congressional members – hopefully many more. We will organize you into teams to lobby to your Senators and Representatives.

While every effort will be made to schedule meetings directly with members of Congress, it is possible your meeting could be with a member of the legislator’s staff. Don’t be discouraged by that. Staff members are key advisers to members of Congress. They have the member’s ear and are critical to Congress’ role on policy issues important to our industry. NIADA will help prepare you for congressional meetings by providing you with key talking points about issues to address with the member or staff. Because members of Congress are busy, the meetings will likely be brief – around 20 minutes – but rest assured, you are making an impact. Your meetings on the Hill will not be the only contact you have with members of Congress while you’re in Washington. Throughout the conference, we will be able to interact with members outside of their offices in both formal and informal settings. For example, between morning and afternoon lobbying sessions, we will have a member of Congress as a special guest speaker. We will also host several members of Congress at a special reception and dinner on Tuesday, Sept. 26, when one of those legislators will be presented with the inaugural NIADA Legislator of the Year award. That reception and dinner is also an opportunity to support the NIADA Political Action Committee Fund, which is used to back candidates for election who will protect the interests of small business and the independent dealer. While I realize taking a few days away from the dealership is never an easy thing to do, your attendance at the National Policy Conference is an investment in the long-term sustainability of your business, one that can’t be made in other ways. NIADA will continue to advocate on your behalf. It is, after all, one of our core missions. But no one can tell your story better than you. And every Senator and Representative we’ve ever talked to has told us nothing makes a bigger impact on them than constituents coming to Washington to express their thoughts and concerns. “I can’t tell you the importance of having real people from back home come see us” to discuss an issue, Rep. Mario DiazBalart (R-Fla.) said. “Then it’s no longer a hypothetical issue. “It becomes, ‘How does it affect real people? How does it affect their ability to earn a living and feed their families?’ It becomes personal.” I encourage you to join us. Go to niadapolicyconference.com for more information and to register. You can always call or email me as well. I hope to see you in D.C.! SHAUN PETERSEN is NIADA’s senior vice president of legal and government affairs. He can be reached at 1-800-682-3837 or shaun@niada.com.

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SOCIAL MEDIA

BY KATHI KRUSE

SOCIAL MEDIA LESSONS FROM MY PE TEACHER Exercise These Tips for Success

Teachers can affect our eternity. In fact, it’s hard to tell where the influence stops, if at all, even many years later. On today’s social web, our values appear front and center. As the saying goes, reputation is everything, and there are social media lessons to be learned from our days in gym class. Not every teacher has a profound effect but most of us remember what it was like in PE. My teacher was a short, spunky lady named Mrs. Betty Bruno who was also my cheer coach. The best teachers teach from the heart and Mrs. Bruno’s lessons continue to resonate in my world today. I learned each of these lessons from Mrs. Bruno. Let me know how many resonate with you. Failure is not fatal. But failure to change might be. Marketing in the social era can be scary, especially if you’re new. People don’t know what to post or where to even start. The smart thing to do is begin with a strategy, not tactics. Then, keep failing until you succeed. Whatever you do, don’t do nothing. You need to be where your customers are, and that’s social media.

If you find a path with no obstacles, it probably doesn’t lead anywhere. Today we hear a lot of noise urging us to buy a particular social media solution. Don’t believe everything you hear. Social media and managing your digital reputation takes hard work, commitment, talent and a budget. There will be obstacles, but none that can’t be overcome. Once you’re on the right path, you’ll find your sweet spot. Enthusiasm is everything. Social media succeeds because we are social animals. Sharing great information with other humans is embedded in our DNA. Enthusiasm plays a major role in a company’s culture. Empower your employees to create content for your social channels. An enthusiastic team is contagious. Customers will catch it and spread the “awesome.” Teachers teach more by what they are than by what they say. The same is true for your dealership’s brand. It’s no longer viable to just advertise low prices or great service. Your brand is what consumers tell each other it is. Social media affords you the opportunity to show proof of what makes your company unique – to illustrate why customers continue to choose you over the competition. Never mind what others do. Do better than yourself – beat your own record and you’re a success. Many dealers still put a lot of weight on how many Facebook fans or Instagram

followers their competitors have and they judge themselves by it. What matters today in social media is a highly engaged audience that wants to talk about you to their friends. It’s better to have a smaller, engaged group than thousands of followers who’ll never think about becoming customers. Keep score on yourself. Set goals, track KPI’s and measure your progress. That’s how you succeed in social media. People rarely succeed unless they’re having fun at what they’re doing. I can’t begin to tell you the facial expressions I’ve seen when business owners bring up the subject of social media. Whether you agree or not, having fun on social media is one of the keys to success. Drop your preconceived ideas and go have some fun! Experience is a great teacher. I had a client who recently got their first “hater” on their Facebook page. We rode out the storm by remaining patient. Often just having faith your regular, engaged fans will right the ship is all that’s required. It worked this time and the client proved to themselves social media can boost company image. In the future, there will be other haters, but each time you experience these situations, you become better at recognizing how to handle them. Don’t limit yourself. What you believe, you can achieve. With a developed social media strategy, you can engage customers on social media. Many dealers tell me they have to be on social media because everyone else is. While that’s true, they’re limiting themselves by not making an investment. Isn’t your business worth more than a halfhearted effort? It’s not where you start but where you finish. Social media is a seismic shift for every auto retailer. It’s turning companies, especially retail, upside down because operations must be restructured to accommodate customers’ expectations. Wherever you are right now is a good place to start. It’s a moving target – taking swift action matters. Don’t just stand there. Ready. Set. Go. KATHI KRUSE is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc. Kruse Control coaches, trains & delivers webinars focused on integrating social media and online reputation management into dealership operations.

DEALER INSIGHT September/October 2017

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ONLINE MARKETING

BY DALE POLLAK

A LONGER-TERM VIEW OF DIGITAL RETAILING FOR DEALERS Don’t be Short-Sighted Dealers often have an “all or nothing” view of digital retailing. That is, to them, digital retailing represents the full monty of selling a vehicle online. You’d have a “buy it now” button on every vehicle details page for every vehicle, customers would work their deals, and dealers would deliver sold cars to customers at their homes. These dealers also often dismiss this concept of digital retailing as unrealistic – as something too few customers are willing to do today. In turn, dealers make a critical mistake: They put the whole idea of digital retailing on the shelf until the time comes when they’re fully convinced more customers would actually “buy it now” for their next vehicle. This viewpoint isn’t necessarily wrong. In fact, these dealers are absolutely correct that a majority of vehicle buyers today wouldn’t want to buy their next vehicle completely online. Studies show that maybe 10 to 15 out of every 100 people might be ready for this kind of vehicle purchase experience. It does seem a bit ill-advised to invest in an end-toend digital retailing experience when the vast majority of buyers wouldn’t use it. But here’s the big miss for dealers who shelve digital retailing on these grounds: The “all or nothing” view is a bit shortsighted. It undercuts your ability to serve the remaining 85 percent to 90 percent of customers who are, in fact, receptive right now to taking part in at least a piece or two of a digital retailing experience. These are customers who want more convenience and a greater sense of control as they purchase a vehicle. They don’t want to spend hours in a dealership to complete a purchase transaction. They might even pay more for the privilege of completing some part of a deal – such as negotiating a payment, purchase price or trade-in value – from the comfort of their own homes. “I’m getting an additional eight to 10 deals a month because I offer the option of working out deal terms online,” said the general manager of a Southeast Volkswagen store. “We do things differently than other

DEALER INSIGHT September/October 2017

dealers and we’re getting better at telling the world about it.” I hear similar stories from other dealers. Even if they aren’t adding a “buy it now” option to their website, they are fostering a different type of engagement that speaks to the needs of today’s increasingly me-focused and time-addled buyers. In other words, they’re working deals while “all or nothing” dealers aren’t getting any of the action. The general manager for a Midwest Lexus store noted his dealership continues to see a growing number of customers take advantage of his digital retail offerings. He added every one of the customers who negotiates a payment or trade-in value online still wants to “come in and take delivery in person.”

THE TAKEAWAY HERE FOR DEALERS IS THAT DIGITAL RETAILING SHOULDN’T BE VIEWED AS AN “ALL OR NOTHING” PROPOSITION. RATHER, IT’S MORE OF A “HAVE IT YOUR WAY” APPROACH, WHEREIN DEALERS PROVIDE THE DIGITAL RETAILING TOOLS, AND CUSTOMERS USE AS MUCH, OR AS LITTLE, OF THEM AS THEY PREFER. Such is the nature of digital retailing today. The vast majority of vehicle buyers aren’t really looking for a “buy it now”based, end-to-end digital car deal. They simply want to carve out the parts of buying a car they perceive as potentially problematic and time-consuming, and complete them in a way that’s more convenient and easier for them. The takeaway here for dealers is that digital retailing shouldn’t be viewed as an “all or nothing” proposition. Rather, it’s more of a “have it your way” approach, wherein dealers provide the digital retailing tools, and customers use as much, or as little, of them as they prefer. I understand how and why some dealers have landed on an “all or nothing” view of digital retailing. I would simply encourage them to consider the business they’re probably missing as they hold out for a complete, end-to-end digital retailing solution the majority of buyers may never want, and might never arrive. DALE POLLAK is founder of vAuto and has published several books on his Velocity Method of Management.

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BHPH MATTERS

BY SCOTT BATES

ADD STRUCTURE & SCALABILITY TO YOUR BHPH DEALERSHIP Key Advantages

There are three key advantages for Buy Here-Pay Here auto dealers to establish a strong partnership with their CPA firm: maintaining compliance on bank financing, filing an accurate and clean tax return, and operating at a profit. When these three advantages are realized, the dealership is set up properly to sustain cash flow and avoid costly penalties by state or federal agencies like the IRS. In this article, we explore common accounting mistakes made in BHPH dealerships in the areas of discounting, reporting, remitting sales tax and customer service – and how to add more structure to efficiently scale up your operation. Used cars are in high demand – and not just by people with no credit or bad credit. Debt-averse consumers of all stripes are shopping a wide variety of used inventory online or with their favorite dealer. Subprime lenders also view used cars as a hot commodity again, and have become competition for Buy Here-Pay Here dealers and their related finance

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corporations. As the industry saying goes, “Now is the best time…” for BHPH dealers to make sure their systems and records are efficient and clean to compete in this competitive landscape. There are three distinct advantages to operating a clean and efficient BHPH dealership. Dealers can more easily document and satisfy bank financing terms during an audit. They can plan ahead and file an accurate tax return and remit accurate sales tax. They can also attract and keep more customers in vehicles for a longer period of time. In our experience, problems with accounting, collections or sales tax remittance often don’t come to light until an audit or tax return preparation. That timing may lead to a costlier process to fix problems, including potential penalties by the IRS, state department of revenue or even the Consumer Financial Protection Bureau. For a few hours a month – and the right knowledge about which data to record and which reports to review – your dealership can be efficient, competitive and scalable. SCOTT BATES, CPA, is a partner in the audit practice Cornwell Jackson. Contact Scott at scott. bates@cornwelljackson.com or 972-202-8000.

September/October 2017 DEALER INSIGHT

WASHINGTON UPDATE

BY SHAUN PETERSEN

NIADA GOVERNMENT UPDATE Latest Government Issues and Activity NIADA is your voice in Washington D.C., advocating for independent dealers, the used vehicle industry and small business. Here’s a look at the latest news and NIADA efforts regarding legislative, regulatory, PAC and grass roots activities.

LEGISLATIVE Recalls became a hot topic in Congress – again – as seven Democratic lawmakers introduced a bill that would ban the sale of used vehicles with open recalls. Sens. Richard Blumenthal (D-Conn.) and Edward Markey (D-Mass.) introduced the Used Car Safety Recall Repair Act in the Senate, while Rep. Jan Schakowsky (D-Ill.) introduced the House version with four cosponsors. The measures were brought up in the wake of a July accident in which a recalled Takata airbag was blamed for a motorist’s death. Blumenthal and others have brought up similar legislation on several occasions over the past few years, only to have it defeated each time. NIADA shares the goal of 100 percent recall completion rates and supports public policies designed to achieve that goal. But overbroad legislation prohibiting dealers from selling any used motor vehicle with any open recall does not move toward achieving that goal. The proposed legislation treats all recalls the same – safety-related or not – and does nothing to manufacture the parts necessary to repair recalled vehicles or entice owners to take a recalled vehicle to a franchise dealership for repair. And most important, it harms consumers by diminishing the trade-in value of their recalled vehicles by an

average of $1,210 – and often upward of $5,000 – and would likely force dealerships to not take those vehicles in trade at all. Requiring dealers to ground vehicles for any recall does not justify that economic loss, particularly when the National Highway Traffic Safety Administration admits not every vehicle with an open recall needs to be grounded immediately. NIADA stands ready and willing to work with members of Congress to find common-sense solutions to improve recall completion rates. However, this legislation – which was rejected numerous times by the previous Congress – is not the answer. REGULATORY The Federal Trade Commission’s Bureau of Consumer Protection announced changes to its investigative procedures designed to simplify and streamline information requests and improve transparency in FTC investigations. The FTC said the reforms, which relate to Civil Investigative Demands in consumer protection cases, are part of acting chairman Maureen Ohlhausen’s efforts to further the agency’s mission to protect consumers and promote competition without unduly burdening legitimate business activity. The changes include: • Providing plain language descriptions of the CID process and developing materials to help small businesses understand how to comply. • Adding more detailed descriptions of the scope and purpose of investigations to give companies a better understanding of the information sought by the FTC. • Where appropriate, limiting the relevant time periods to minimize undue burden on companies. • Where appropriate, shortening and simplifying the instructions for providing electronically stored data. • Where appropriate, increasing response times for CIDs – for example, from 21 days to 30 days for targets and 14 days to 21 days for third parties.

To keep companies updated about the status of investigations, the Bureau of Consumer Protection will continue to communicate with the investigation’s targets at least every six months after they comply with a CID. “It is our duty to carry out our vital mission in the most effective and efficient way possible,” Ohlhausen said. “The changes … will reduce unnecessary and undue burdens of FTC investigations without compromising our ability to protect American consumers.” Ohlhausen said she initiated the project to address concerns raised by members of Congress and the American Bar Association Antitrust Section’s Presidential Transition Report about the investigational burdens on businesses and added that the FTC is still considering other reforms. GRASS ROOTS/PAC Another indication of NIADA’s growing influence in the U.S Congress was recently dropped at our doorstep – almost literally. A representative of Rep. Mario Diaz-Balart (R-Fla.) reached out to the association to let us know the Congressman was interested in visiting NIADA’s headquarters in Arlington, Texas. Rep. Diaz-Balart, a member of the powerful House Appropriations Committee and chairman of the Subcommittee on Transportation, Housing and Urban Development, was in Texas to meet with fellow committee member Kay Granger. As part of his goal to meet with businesses and organizations with a significant presence in Washington and a stake in issues that are important to him, he sought out NIADA. Rep. Diaz-Balart and his chief of staff visited July 20 and met with NIADA CEO Steve Jordan and senior vice president of legal and government affairs Shaun Petersen to discuss several issues, including the ongoing effort in Congress to reform the Consumer Financial Protection Bureau. A proposal for CFPB reform that included elements of Rep. Jeb Hensarling’s Financial CHOICE Act were included in the Fiscal Year 2018 Financial Services Appropriations Bill that was approved by the House Appropriations Committee in July. Rep. Diaz-Balart voted in favor of the resolution. Following the meeting, Rep. Diaz-Balart was presented with a contribution of $2,495 from the NIADA-PAC fund. SHAUN PETERSEN is NIADA’s senior vice president of legal and government affairs.

DEALER INSIGHT September/October 2017

www.nmiada.com

NMIADA &

Presents Guest Speaker

Majd G. Saboura 2017 Annual NMIADA Convention/ Expo & Continuing Education Thursday October 19th, 2017 Isleta Resort and Casino

Speaking on an Evolutionary View of Wholesale Acquisition Sourcing wholesale vehicles at auction already makes a big impact on your bottom line. But the way the automotive industry is evolving, it’s about to become even more critical to your entire dealership’s success.

Majd G. Saboura

Director of Wholesale Business Development vAuto Majd Saboura is a ten-year veteran of the automotive industry. Majd specializes in the wholesale market where he has worked nationally and internationally, connecting buyers and sellers on behalf of Manheim. In his current role with vAuto, Majd leads business development for Stockwave, vAuto’s wholesale sourcing solution. Prior to his position at vAuto, Majd held international nance and revenue management positions for Manhattan Associates and INVESCO. Majd earned a Bachelor’s degree in accounting from Kennesaw State University. He and his family live in Atlanta.

www.nmiada.com

September/October 2017 DEALER INSIGHT

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DEALER INSIGHT September/October 2017

www.nmiada.com

September/October 2017 DEALER INSIGHT

MANAGEMENT GAMEPLAN

BY SCOTT BERGERON

DOES YOUR SALES PROCESS MEASURE UP? Time to Fine Tune

Are you fed up with your sales team? Your processes? If you’ve watched your salespeople get too comfortable and satisfied with their own performance, maybe it’s time to shake things up. And I’m not talking about sweeping house and starting over. One of the best salespeople I ever met was Jeff Barber. He’s now retired and living an awesome life, fishing and hunting in the Colorado Rockies. Jeff would always give me advice when I was working my way up, first as a green-pea, then in management. Jeff is a former drag racer. He said, “Selling cars is a lot like drag racing – everyone’s got an engine, and if they’re all built the same way, the one who does the best job of fine tuning his car will win. If you lose a race, you don’t tear apart the engine – you fine tune the obvious problems. “Besides, spark plugs are a lot cheaper than an engine rebuild. We all have the same opportunities in sales, but it’s the guys who work smarter and fine tune themselves and their daily routines who will win.” There’s huge danger in thinking you’ve got everything dialed in – especially when it comes to fundamental items in your dealership. For example, have you reviewed your contract and financing forms to make sure they’re easy to read, navigate and understand? Coasting along without conducting basic inspections of basic processes will lead to problems. Without this step, you’re likely letting profits walk out the front door – in many cases without even knowing it. Then, there’s the other side of the equation – where your processes are so bad everybody knows about it. United Airlines is an example. Their “established” policies led to a firestorm of public criticism and severely damaged their reputation when they dragged a bleeding passenger off a plane. Lack of knowing or lack of inspections will harm your dealership. In the long run, it could damage its reputation, which could take years to bring back to glory days. Here’s an example. One of the nation’s largest dealers recently sold me and my wife a car, but not without many hours of illegible paperwork, and frustrating old school 4-square processes that didn’t even pertain to my situation. If a customer brings in a 60 percent down payment of a free and clear trade, and the salesperson says, “They can’t calculate the payments unless you put cash down,” it can

DEALER INSIGHT September/October 2017

be a little frustrating to say the least. And no, this wasn’t a green pea. It was an eight-year veteran, and yes the desk required a cash dollar down before they would work up figures, apparently to adhere to established policies. After this silly process, the paperwork was hard to read and looked like it had been copied repeatedly since 1993. Finance processes and slowdowns also can lead to hours of unproductive time for staff, not to mention the reputation it’s putting into your customer’s head. If it can happen in a big box store, it can happen anywhere. Here’s where and how to fine tune your sales engine without large amounts of cash or time investment. Who are you selling to? Whether business is good, decent, or falling off a cliff, look at where sales are or are not coming from. If your dealership has a loyal base of aging customers, you’d better start planning for the next generation of buyers – who have demands, expectations and values different from your older customer base. Ask around, talk to Millennials and find out what they want, what would bring them in the dealership, and what turnoffs exist. Many younger generation buyers don’t believe in the dealership model at all, so you’d better have your Internet department bulletproof, and start thinking outside the box. The dealership model is changing in many ways, and if we rely on “doing things as we’ve always done” you can find yourself kicked to the curb. In fact, there’s nothing wrong with a salesperson asking an UP, “What do you hate most about buying a car?” At least it isn’t the same old, “Can I help you?” It gives customers a chance to vent, and gives the salesperson an opportunity to show off why your store is different, and they’ve just found someone who listens. Salespeople and Performance First, look at your sales board and who’s selling the most cars and why. Then do the same with the bottom of the board. If you have good information, either from a CRM or a paper-based system, you can tell why the top guys are leading and the bottom guys are trailing. It usually stems from a “sales process glitch.” Your top guy who talks to 50 people is usually demo-ing at least 35 of them. What are your bottom guys demoing? How many are they writing up? Raw data on the basics can convey a lot you may have skipped over. Getting a handle on the basics gives you a place to start but it’s a long way from the finish line. For example, good sales performers always can be made better with improved prospecting, tracking and accountability techniques. Poor sales performers likewise can improve with these same steps. There’s always room for improvement. Factor in

THERE’S ALMOST NOTHING WORSE THAN HAVING A HAPPY CUSTOMER GO BAD BECAUSE OF BAD PAPERWORK OR A SLOW PROCESS DURING DELIVERY. the ideas, insights and idiosyncrasies of the up-and-coming customer base and address how to best handle different buying groups – the older, more established and loyal crowd and the younger generation. Finance and Delivery Processes and Procedures There’s almost nothing worse than having a happy customer go bad because of bad paperwork or a slow process during delivery. This is what happened to me at the big box store with my wife. Frankly, I was amazed. Given this dealership’s size, the last thing I expected was hardcopy paperwork where type was illegible and agreements were poorly written. Obviously, I wasn’t alone in this situation. Most people usually don’t wait for the question about what they hate about a dealership experience. Most will tell us without asking – they hate that the process takes so long, even when they do most of the homework ahead of time online. It leaves me asking the following question: How many people will not return, or show consistent loyalty, to a dealership because their last impression was unfavorable? Today’s sale is a chance to do one of two things: Solidify a long term customer, or make them wonder why your dealership isn’t keeping up with the times. Former dealer executive SCOTT BERGERON is the founder and principal at Daily Gameplan (www.dailygameplan. com), a sales team performance company. Daily Gameplan’s “Red Book,” cloud-based CRM, and direct consulting have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@dailygameplan.com.